Where are they investing their money to return a consistent 8%?
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They invest in preferred stocks and bonds, real estate and other places I don't recall. Old Mutual provides a prospectus and describes their assets etc.
They're using the index and guaranteeing 1%. So, if you're doing investment for retirement, you don't lose principle in a given year.
If you'd put 100,000 in the index in 1983, you'd have about $850,000 after tax at the end of 2007. In the Old Mutual program, you'd have $989,000.
In response to last year's downturn they reduced the cap rate to 8.27% from 9.6%
For retirement the rate if return is very good, but I prefer the safety and tax advantages.
Was I clear? The 8% is an average with a guaranteed minimum.